Professional December 2016/January 2017

PENSIONS INSIGHT

Helping clients choose a pension scheme

The Pensions Regulator provides important guidance

C hoosing a workplace pension scheme is something that many small and micro employers will need to think about when automatically enrolling their staff. They will need either to set up a new scheme or check their existing scheme meets certain criteria. Research from The Pensions Regulator shows that while some employers are confident and willing to do this themselves, many will seek help and support from their business adviser. This article will help you to understand what you can do to help them – either by researching and recommending a scheme yourself, or by making them aware of the considerations to take into account when choosing a scheme, and telling them where to go for more information. You can support your clients in choosing a pension scheme in a number of ways: ● provide factual information, for example you could identify the pension schemes available and provide a comparison of the schemes’ investment funds, charges and services ● recommend a specific pension scheme

will have a set of ethical standards that you should refer to, which may include that you have sufficient knowledge and experience to offer automatic enrolment services. You should also check to make sure that any automatic enrolment work that you carry out is covered by your professional indemnity insurance. Considerations to take into account (See Image 1 – Choosing a scheme, for summary.) ● Using an existing pension scheme – Check with those running your client’s pension scheme to see whether they can use it for automatic enrolment. If your client can’t use their scheme, they’ll need to choose a new one that meets the requirements for automatic enrolment. It’s important to look at different schemes to weigh up the different features offered before deciding which is suitable for your client and their staff. You need to think about whether the scheme will accept all your client’s staff, how much it will cost and whether it will work with your client’s payroll software. ● Choosing a new scheme – Employers are increasingly using schemes run by large, specialist providers that are designed to be used by many different employers. These include ‘master trusts’ that are

for automatic enrolment ● refer your client to another adviser – you can use websites such as the Money Advice Service retirement adviser directory (http://bit.ly/2fEExuh), which contains advisers who can help employers choose a pension scheme for automatic enrolment. Not registered with the FCA Even if you are not registered with the Financial Conduct Authority (FCA), you can recommend a specific pension scheme to your client so long as you are providing this advice in their capacity as an employer rather than an individual. Providing an individual with investment advice will need the appropriate authorisation from the FCA. It may not always be clear whether an employer is seeking advice as an employer or an individual; for example, if your client is thinking about joining the scheme themselves. You may want to specify in your letter of engagement that any advice you provide to a client is provided in their capacity as an employer and not as an individual. If you belong to a professional body it

...so long as you are providing this advice in their capacity as an employer rather than an individual

| Professional in Payroll, Pensions and Reward | December 2016/January 2017 | Issue 26 30

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